With the government loosening the FDI norms for single retail, many global brands have forayed in India to maximize the untapped potential of the Indian market. India offers the youngest consumer base aged between 15 and 64 expected to rise from almost 64 percent of its population in 2009 to 67 percent in 2020. Four Singapore brands recently visited India with some of the fresh and uber suave business concepts to study in the Indian market.
The delegation was escorted to the top cities by the Franglobal team. They toured the busiest retail properties to evaluate each and every parameters starting from the footfall, consumer demographic, price points etc. Finally, when they reached Delhi for a strategy session on the opportunity offered by the Indian market, they seemed very much sanguine about their India entry.
The Delegation
The strategy session was led by Venus Barak, Vice President, FranGlobal, Tuhina Bhatt Reen, Regional Head – South East Asia, FranGlobal along with other team members of FranGlobal and Francorp team in the presence of Rohit Seth, CFO, Franchise India, Amita Mehta, Centre Director, New Delhi, South Asia Group, International Enterprise Singapore, Yaser Siddiqui, Business Development Manager, New Delhi, South Asia Group, International Enterprise Singapore, along with the Franglobal and Francorp team. The Singapore Delegation included the Adrian Khong, Director, Jewel Coffee; Yvonne Loh, Project Executive, Jewel Coffee; Ivan Teo, Director, Arteastiq; Jacqueline Wu, Sales & Operations Manager, Arteastiq; Mr.Edwin Ng, Director, Munch; Yeow Lin, Business Development, Lush Addiction and Joseph Lim, Director, Lush Addiction.
The Presentation
The presentation offered the Singapore delegation an overview of the opportunities in retail in India. The presentation touched upon the main sectors that are driving growth in organised retail through franchising.
Franchise Dynamics of India
Indian franchise industry is currently estimated at $24 billion with an expectation to reach $35 billion by 2020. India is the second largest evolving economy in the world with a growth of 75% in the consumer spending over the last few years. Presently there are more than 3000 franchise brands in India and around 1000 global brands every year are contemplating entry plans for Indian territories. The Indian franchise industry contributes approximately 4% to India’s gross domestic product in 2017. 26% of the franchise buyers in India are women. It was emphasised in the discussion that it is extremely important to tie up with the right franchise partner. Indian partners have been extremely instrumental in driving the growth of the global brands in India.
Emerging Sector
The key franchising industries in India are Retail; Food and Beverage; Health, Beauty and Wellness; and Education and Training. Fashion the largest segment that is driving growth in the retail industry. And if apparel is leading the show in fashion retail, footwear and accessories have also evolved to be the style statement for the aspiring, upwardly moving young population in India. The presentation showed how the global brand Accesorize, partnered with DLF is excelling through franchising. Also it was emphasised that the omni-channel retail is catching up in India that helps the retailers to engage their customers in a better way.
The presentation further proceeded to explore the opportunities in the Food and Beverage segment. Frequency of eating out registered growth driven by the urban consumer. The millennial populace becoming more health conscious together with the upwardly moving lifestyle is resulting in the shift towards healthier dining options. It was noted that the international companies continue to dominate chained outlets.
One of the fastest growing segments in Indian food services, with several domestic and international brands making their forays, the chain cafe market is estimated to feature 100 brands with 3,100 to 3,200 outlets spread across various cities in India.
Right time for franchising in India’s marketplace
As a business model, franchising is becoming especially widespread in India’s metropolitan areas gaining a firm foothold since the government started loosening financial regulations in the 1990s to encourage a free-market economy. Notably, in 2009, the Indian government lifted the restriction on foreign franchisors’ ability to charge royalty rates above certain levels without needing specific Government approval. Now foreign franchisors may charge a lump-sum fee and royalty for the transfer of technology and use of a trademark or brand without any maximum limit through the automatic route.
On the sideline:
Adrian Khong, Director, Jewel Coffee: “We bring some of the finest coffees from across the world as opposed to the blended coffee in India. We plan to enter India by this year. I have left it Franchise India who can help us to know the market better in terms of what kind of returns, support and training the Indian investors need.”
Mr.Edwin Ng, Director, Munch: “We are a top salad brand in Singapore. We have a total number of nine outlets. Most of our outlets are franchised. In India, we are looking for a person whom we can trust to maintain our operating standards.”
Ivan Teo, Director, Arteastiq: “India is a tea drinking nation and they have a very fine blend of tea. Our tea blend is very fancy, special and creative that you don’t find in India. In India, we are looking for people from the Food and Beverage background or at least owner of good real estate.”
Tan Yeow Lin, Business Development, Lush Addiction: “Indian market has great potential as every women here loves accessory. So, it is a huge market. We plan to enter India through master franchisee.”
Amita Mehta, Centre Director, New Delhi, South Asia Group, IE Singapore: “Indian government liberalising FDI for single brands has been a push factor for some of the global brands to look at the market. Before entering India, the global companies should have the four basic parameters right. They should identify the right segment, the right partner, intelligent pricing and a great business format to sustain the brand as well as its partner.”
Venus Barak, Vice President, FranGlobal: “Singaporean companies have a very unique characteristic that is akin to the India culture. India offers a large market platform for Singapore companies. We have received a very positive response from prospective franchisees which further enhances our confidence and commitment towards the business engagement between India and Singapore.”
